Good governance and economic development: The GPA as an enabling instrument Nicholas C. Niggli, MIA, MSc EcH Head, Economic, Finance, Science & Innovation Section Embassy of Switzerland in the United Kingdom Chairman, Association of Economic Representatives in London (AERL) 2014 Chairman, WTO Government Procurement Agreement 2007 2012 Chairman, WTO Pension Plan Management Board 2007 2013 WTO Symposium THE REVISED WTO AGREEMENT ON GOVERNMENT PROCUREMENT (GPA): AN EMERGING PILLAR OF TWENTY FIRST CENTURY TRADE AND DEVELOPMENT CENTRE WILLIAM RAPPARD Geneva 17 18 September 2015 S1.1 The views expressed in this presentation are exclusively those of the author and may not be attributed to the Swiss Confederation, the AERL or the WTO
Content Governance & Development: does it take both to tango? Government Procurement: why bothering? The Revised WTO GPA: an enabling instrument? Concluding thoughts 2
1 Governance & Development: Does it take both to tango? 3
In just 8 days UN Sustainable Development Summit : Sept 25 27 2015 2030 Agenda on Sustainable Development to be adopted List of 17 targets is broad, ambitious and integrated Epic opportunity to achieve positive change on grand scale What will it take to turn words into action? 4
Starting points «Bothdeveloped and developing countries will have to do their part and commit to good governance, rule of law and the fight against corruption in order to realize the post 2015 development agenda» «Wehavetobuild institutions that do ( ) allow politicians to come and go but ensure that the institutions stay and the essential services get delivered» Amina J. Mohammed, UN Secretary General s Special Adviser on post 2015 development planning The Guardian, 25.11.2014. Twin values: inclusiveness and accountability
Weak governance costs: clear evidence available Costs more than 5% of global GDP (US$ 2.6tn, WEF) with over US$ 1tn paid in bribes each year (WB) Increases inequality (Gupta, 2002) and cost of doing business (±10%, IMF) Reduces investment ( 5%, IMF) and capital productivity (Lambsdorff 2003) Perpetuates poverty and excludes the poor from public services (WB) Ultimately deligitimizes the State, with many adverse consequences (TI, Chayes 2015) 6
Unhealty conversation Key: finding ways to reinforce institutions 7
2 Government Procurement: Why bothering? 8
It s not that dramatic and well worth the effort! 9
The State as an economic player: Far reaching economic, fiscal, social and governance related implications There is clearly a lot you can do with 15 20% of GDP, coupled with private investment Infrastructure is the backbone of an economy, supporting essential activities that underpin productivity Key: better use of resources, creation of new business and investment opportunities, improved public services Reforming alone? Laws and institutions are important, but external accountability measures have even bigger impact 10
Creating virtuous circles (or ovals) Trade, Growth / Devt Public Welfare Public Infrastructure / Services Public Procurement Good Governance 11
3 The revised WTO GPA: an enabling instrument? 12
How to implement sound management of GP? Perhaps not that way! 13
A much wiser way but not an easy one! 15 December 2011: A historic milestone 14
An essential question to consider: Why did negotiators work so hard? Acknowledgement that the adaptation of the toolbox to a perpetually evolving world is indispensable Fundamental desire to upgrade the GPA s reach: progressive multilateralization as key objective Without the right framework, there can t be any substantial new success : the development dimension Key: tailor made instead of one size fits all approach 15
The Revised GPA at present: a Swiss Army Knife Pact Largest legally binding GP Agreement in the world Now a XXIst Century recipe, to be further upgraded Good governance enablers : openness, transparency, non discrimination, commitment to fight corruption Minimizing risk and creating predictability / stability: indispensable value added for private investors In built flexibility: strong future growth expected from the extension to EC s, DC s and Frontier Markets 16
To renovate or not to renovate (infrastructure) 17
The perspectives (I): The infrastructure nexus The world s fastest growing regions are still not Parties to the GPA They have tremendous infrastructure needs (And so do Parties to the Agreement, by the way!) OECD: infrastructure spending requirement of $US 50 trillion through 2030, across the world Morgan Stanley: $US 21.7 trillion in infrastructure spending needed across Emerging Markets through 2020 Investors are increasingly interested in infrastructure The GPA s «good governance stamp» has the capacity to help attracting investors / closing the infrastructure gap 18
The perspectives (II): What else makes the Revised GPA attractive? Lessons of history: capital & investment are moving fast a commitment to good governance helps to mitigate risks Governance and efficiency reforms will reduce cost of doing business, improve public services, reduce poverty Secure access to markets & DSB protection can be enjoyed, offering an umbrella against protectionism WTO Accessions lesson: joining earlier is cheaper and will likely yield political and economic extra benefits Strong case, but no easy sell despite compelling arguments 19
4 Concluding thoughts 20
Five indispensable takeaways The GPA offers massive win win win opportunities to its Parties and has therefore sterling potential A formidably powerful change of perspective: from the rich man s to the poor man s club The GPA has the capacity to provide an essential contribution to the WTO s deliverables on development Financial markets will likely find the good governance stamp associated with the GPA increasingly valuable Financing infrastructure needs effectively and innovatively is indispensable to figure amongst tomorrow s winners 21
and one question Could the GPA become one of the global standards for sound public sector governance in the foreseeable future? 22
Thank you very much for your kind attention! Nicholas C. Niggli, MIA, MSc EcH Head, Economic, Finance, Science & Innovation Section Embassy of Switzerland in the United Kingdom Chairman, Association of Economic Representatives in London (AERL) nicholas.niggli@eda.admin.ch LinkedIn: https://uk.linkedin.com/pub/nicholas c niggli/3/173/117 twitter: @ncniggli The views expressed in this presentation are exclusively those of the author and may not be attributed to the Swiss Confederation, the AERL or the WTO 23